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Shell is a better-quality brand name with more than 100 years history in this region, infect the company is still in ownership of a fuel storage tank from 1899. However, the documented history of the Royal Dutch/shell group the Indo-Pak subcontinent dates back to 1903 when a partnership was struck between the shell transporter and trading company and the Royal Dutch petroleum company to supply petroleum products in Asia.
With their key indicators of progress already high-ceilinged to new heights, Shell is committed to dedicate all its energies, resources and the time to bring higher value and fulfillment to their customers, employees and shareholders.
The graph of Shell is going up every year. The ratio of profit is increasing at good profit. Shell is serving the people at high level of standard by going according to the wishes of the customers.
Assessment of the needs and wants of the customers is an ongoing process at Shell, which helps to continually develop new products and services. To continuously offer courteous, professional and advanced business, the team of shell has recently been rejuvenated by going though training programs with a focus on information technology.
Shell History in Pakistan
History of Shell
Shell has an over 100 year's presence in the Subcontinent
Shell Logos from 1900 to 1992
The Shell trade name enjoys a 100-year history in this part of the world, dating back to 1899 when Asiatic Petroleum, the far eastern marketing arm of two companies: Shell Transport Company and Royal Dutch Petroleum Company began importing kerosene oil from Azerbaijan into the subcontinent. Even today, the legacy of the past is visible in a storage tank carrying the date - 1898.
The recognized history of Royal Dutch Shell plc in Indo-Pakistan subcontinent dates back to 1903 when partnership was strike between The Shell Transport & Trading Company and the Royal Dutch Petroleum Company to supply petroleum to Asia.
In 1928, to improve their distribution capabilities, the marketing interest of Royal Dutch Shell plc and the Burmah Oil Company Limited in India were amalgamated and Burmah Shell Oil Storage & Distribution Company of India was born. After the independence of Pakistan in 1947, the name was changed to the Burmah Shell Oil giving out Company of Pakistan. In 1970, when 51% of the shareholding was transferred to Pakistani investors, the name of changed to Pakistan Burmah Shell (PBS) Limited. The Shell and the Burmah Groups retained the remaining 49% in equal propositions. In February of 1993, as economic liberalization began to take root and the Burmah divested from PBS, Shell Petroleum stepped into raise its stake to 51%. The years 2001-2 have seen the Shell Petroleum Company in succession increasing its share, with the Group now having a 76% stake in Shell Pakistan Ltd (SPL) - an expression of confidence.
"You can be sure of Shell"
Goal of Shell
The goal of the company is to position itself as the preferred oil company in Pakistan, leading the field in its commitment to safety, customer service, quality and environmental protection.
"Product mix is the set of all the products offered for sale by a company."
The structure of product mix has both width and depth. Its breadth is measured by the number of product line approved and its depth by the variety of sizes, colors and models offered within each product line. Thus the two main products which Shell Pak. offers are fuel and lubricants. These have further classifications in a variety of constituents which form the product line.
Shell has two product lines namely, fuel and lubricants.
Shell offers a wide range of fuel. These are:
The various lubricants offered by Shell are:
Product Life Cycle
Product Life Cycle Stages:
Product Life cycle means the changes in the sales volume of the product over the life the product. In market there is always ups and downs are nearby because this is a self-motivated world. Everything will have to finish after definite time period, by finishing their life, so the life cycle of Shell is.
We differentiate a product as anything that is capable of fulfilling customer needs. This definition includes both physical products e.g. Cars, Washing machines, DVD players as well as services e.g. insurance, banking, private health care. Business should manage their products suspiciously over time to ensure that they deliver products that continue to meet customer wants. The process of managing groups of brands and product lines is called portfolio planning. The stages during which individual products develop over time are called Product Life Cycle. The classic product life cycle has four stages.
At the beginning stage market size and growth is slight. It is possible that considerable research and development cost have been incurred in getting the product to this stage. In addition, marketing costs may be high in order to test the market, go through launch advertising and set up distribution channels. It is highly improbable that companies will make profits on products at the beginning stage. Products at this stage have to be carefully monitored to ensure that they start to rise. Otherwise the best option may be to leave or end the product.
The growth stage is characterized by quick growth in sales and profits. Profits start due to an increase in output [economies of sales] and possibly better prices. At this stage, it's cheaper for business to inset in increasing their market share as well as enjoying the overall growth of the market. Accordingly, major promotional resources are traditionally invested in products that are firmly in the growth stage. Shell Pakistan beginning stage is successfully done because it comes from the international market and enters in Pakistan market. Now company has about 40-45.5% of market share and still rising.
The expansion stage is perhaps the most common stage; it is in this stage that competition is most zealous as companies fight to maintain their market share. Here both marketing and finance becomes key activities. Marketing spend has to be monitored carefully, since any significant moves are likely to be copied by competitors. The maturity stage is the time when most profit is earned by the market as a whole. Shell Pakistan not yet enters in maturity stage.
In the decline stage the market is reducing the overall amount of profit that can be shared amongst the remaining competitors. At this stage great care has to be taken to manage the product carefully. It may be possible to take out some production cost, to transfer production to cheaper facility, sell the product into other cheaper marketplace. Care should be taken to control the amount of stocks of the product. Shell Pakistan is a brand name and company is not in decline stage because their sales increase day by day.
Price is the amount of money for which a product is presented in the market. The amount of money charged for the product of services of sum of the value that purchaser exchange for the regulars exchange for the remuneration for having or using the product of services price is only which brings revenue in the market, so it plays a significant role in the market.
Strategies of Pricing:
There are two types of strategies present in marketing.
Market skimming price
Market penetration price
Market skimming price:
This is high price settings for a new product to skim maximum profits layer by layer from the segments willing to pay the high price the company makes favor but more profitable sales marketer prefer to this type of price strategies because there is every product that comes in the market will have to go out from the market every product that comes in the market will have to go out from the market every product have its limited life and after spending certain period of time product leave from the market like the computer software program that comes in the market has the time period of 6 or 3 months in the past but now there is soft ware programs that have limited life period of eighteen days, and after eighteen days there strategy because there point of view is that product have to go out from the market then they comes up with high prices to earn profit that minimizes the cost that spends when it was made and finally out of the market.
Market penetration price:
Settings a low price for a new product in order to attract a large number of buyers and large market shares. Companies also adopt this strategy when they enter in the market. Shell Pakistan limited also comes up with the penetration strategy because it is an international market and they just want to enter this market now this company enjoying the high profit and continuums in the product life cycle.
A target market is the market segment which a particular product is marketed to. It is often defined by age, gender socio-economic grouping.
Targeting strategies is the selection of the customers u wish to service. Including;
How many segments to targets
Which segment to target
How many product to offer
Which product to offer in which segments
There are three steps to targeting:
Targeting strategy decision is influenced by:
Diversity of buyers need
The companies size
Strength of the competition
The volume of sales requires for profitability
It is the process of evaluating each market segment's attractiveness and selecting one or more segments to enter. Market targeting depends upon the financial positioning of company. If company is strong financially then he must go for market targeting. Shell in Pakistan produces verities of products. All these products are available urban as well as rural area.
Market is the processing which dividing a market in to distinct group of buyers on the basis of needs characteristics or behave who might requires separate products or marketing mixing.
Market consist of buyers and buyers differs in one or more ways they may differing their wants, resources, locations, buying attitude and buying practice.
Shell Pakistan ltd. Divide his market in to following segments:
Demographic segmentation is dividing the market in to groups based on demographic variables such as:
Shell introduces their product for upper class, upper middle class and middle class. In other words shell produces its products for everyone who have automobile.
Geographic segmentation is dividing the market in to different geographical units such as.
This is all about the segmentation of shell. Shell provides facilities of petroleum to urban as well as rural areas. Segmentation basically depends upon
Population of that area
Living standards of people
Levels of Market Segmentation
There are three levels of market segmentations
Shell Pakistan limited go for the mass marketing because its distribution is very extensive. Internationally its products are goes into international market.
The process of arranging of product to occupy clear distinct and desirable place related to competing products in the minds of target consumer. Shell Pakistan companies lies its growth stage in the market and enjoys 65% shares. Now gradually with the increase of growth rate is expands its products line and also its distributions.
The BCG Matrix
The business portfolio is the collection of business and products that make up a company. The best portfolio is the one that fits the company's strengths and helps to exploit the most attractive opportunities.
The company must:
Analyze its current business portfolios and decide which should need more or less investment.
Develop growth strategies for adding new products and businesses to the portfolio while, at the same time, deciding which products and businesses should no longer be retained.
An SBU is a unit of the company that has a separate mission statement and objectives and that can be planned independently from the other businesses. An SBU can be a company division, a product line or individual brands.
Stars are high growth businesses competing in the market. Often they need heavy investment to sustain their growth.
Cash cows are low growth businesses with relatively high market share. These are mature successful businesses with relatively little need for investment.
These are the SBUs with low market share but which operate in higher growth market.
Dogs refer to businesses that have relatively low share in unattractive low growth markets. Organizations prefer to divest from dogs.
Shell in BCG Matrix
We put Shell in Stars in the BCG Matrix because shell has a good market share and it has the opportunities to grow more.
The SWOT Analysis
SWOT stands for Strengths, Weaknesses, Opportunities &Threats. In which, Strengths and weaknesses are related with internal environment of the organization and opportunities and threats are related with external environment of the organization.
Shell strengths mean what are the positive points of the organization. The strengths of shell Pakistan Ltd are:
The managers regard their sub ordinates.
Main focus of the organization to increase their customers.
Managers use participative approach.
Their employees are highly motivated.
They hire local employees.
No clash with GOVT. or any agency.
They care about the hygienic factor.
Shell is using effective means for the promotion of its products.
Shell provides in time deliver to their petrol pumps.
Incentive based policies for motivating employees.
Shell has international Standard petrol pumps.
Mobile training units keep the staff up-to-date.
They are not offering any package to their regular customers.
They are not offering any bonus package scheme.
Shell has eight regional retail managers. They are insufficient to handle the problems.
They have no proper shades and sitting arrangement at the filling stations.
There is no proper drainage system at filling station.
Shell is an international company so it should introduce packages.
Company has an opportunity to give special packages to its employees.
Company has opportunity to install more CNG as well as petrol pumps in rural areas of Pakistan.
Threats are actually competitors.
PSO and CALTEX improvement.
Installation of stations by TOTAL.
The smuggling of petrol in Balouchistan from Iran.
Entry of new companies in the refinery sector.
For the analysis of external environment following are important factors (PEST).
Socio cultural forces
In Pakistan there are rapid changes of Government since poison. Each government that came in power condemned the planning work done by the precious government. The slow development due to political instability but now the preset government is very stable to grow because govt. is providing incentives to different industries.
In Pakistan GNP is 5.41 and inflation rate is very high which is 12.7. The balance of payment position in Pakistan is -3.5%. The employment rate is 34.94 million.
In Pakistan population is increasing and social values are also changing so the demand of fuel consumption is also increasing. People are coming from rural areas to cities and their motor cycle for traveling.
Pakistan's attempt to raise the living standards of its citizens has meant that economic development has largely taken precedence over environmental issues.
Pakistan environment regarding the technology is not very advance due to the lack of resources. Natural gas, because of its environmental qualities, efficiency, and technological advances are going to play an increasingly important role in meeting demand for clean energy.
Our customer is high class, low class and also middle class, because every class is used petrol for consumption.
Our suppliers are Pakistan refinery, National refinery and Attock refinery and Dhodak refinery.
Labor is frequently available in Pakistan because of high unemployment rate. Skilled and unskilled persons are available at lower wages.
Major competitors of Shell are PSO with petrol pumps and Caltex with petrol pumps. But shell Pakistan limited operates in the petroleum refinery sector. Shell Pakistan limited also competes with three other petroleum refiners in Asia
Shell has established 1404 petrol filing station in different areas of Pakistan. But now the company is trying to reduce the number of petrol filing station because they do not need that filing station, whose monthly sales are less then 500000 liters. Up till now about 50 pumps are renovated in different cities of Pakistan.
Number of Depots in Pakistan:
Shell has got 14 depots in different areas of Pakistan.
Types of Resources:
Research and Development
Shell provides the training facilities to their labor and management to create the good relation to their employees. Shell Company also motives its employees and provides different incentive on their good performance.
Operation of the company is based on continues improvement is the acknowledgement that workers experience and knowledge can help to shoe production problem and contribute towards tightening variances and reducing error.
Shell design and manage high-class information system that improves the productivity and decision-making. In organization information may be collected, stored and synthesized in such manner that answers important operational and strategic questions.
Information system is one of the strength of the organization. It provide aid in environmental scanning and in controlling activities, it can also used as a weapon in gaining competitive advantage.
Shell Pakistan Limited reported sales of 63.63 billion Pakistan rupees for the fiscal year ending June of 2001. This represents an increase of 76.2%, versus 2000.When the company's sales were 36.12 billion Pakistan rupees.
During 2001, the company's sales increased at a faster rate than all three comparable companies. While shell Pakistan limited enjoyed a sales increase of 76.2% the other companies saw smaller increases; Chennai Petroleum Corporation Limited sales were up 29.1%, National Refinery Limited increased 15.9%, and Mangalore Refinery & Petrochemical Limited experienced a sales decline of 6.3%. Shell Pakistan Limited currently has 608 employees with sales of 63.63 billion Pakistan Rupees.
In recent years, this stock has performed terribly. In fiscal year 2000 the stock traded as high as 367.50 Pakistan rupees. During the past 13 weeks the stock has fallen 803%.
During the 12 months ending 30/06/01, earnings per share totaled 30.12 Pakistan rupees per share. Thus, the price/Earning ratio is 5.48. Earning per share fell 18.7% in 2001 from 2000.The Company's price to book ratio is higher than that of all three comparable companies, which are trading between 0.25 and 0.97 times book value.
On the 63.63 billion Pakistan rupees in sales reported by the company in 2001, the cost of goods sold totaled 44.75 billion Pakistan rupees, or 70.3% of sales. This gross profit margin is significantly better then the company achieved in 2005, when cost of goods sold totaled 91.1% of sales.
Shell Pakistan Ltd's 2001 gross profit margin of 29.7% was better than all three companies.
Shell Pakistan Limited Operates in the Petroleum refining sector. This Analysis compares shell Pakistan Limited with three other petroleum refiners in Asia.
Pakistan State Oil:
The past of PSO dates back to mid-70s when the Government of Pakistan amalgamated three "Oil Marketing Companies": Esso Eastern, Pakistan National Oil (PNO) and Dawood Petroleum as part of its "Nationalization Plan".
The company is the only public sector entity in Pakistan that has been competing effectively with three multinationals (Shell, Caltex and Total). PSO is currently enjoying over 73% share of Black Oil market and 59% share of White Oil market.
It is engaged in import, storage, distribution and marketing of various petroleum products including mogas, high speed diesel (HSD), fuel oil, jet fuel, kerosene, liquified petroleum gas (LPG), compressed natural gas (CNG) and petrochemicals. PSO also enjoys around 35% market participation in lubricants and is blending/marketing Castrol brands, in addition to a wide array of its own. It is considered as one of the most successful mergers in the history of Pakistan. The company has retail coverage of over 3,800 outlets, representing 80% participation in total industry network. The company has been the winner of Karachi Stock Exchange Top Companies Award for many years and is a member of World Economic Forum.
PSO serves a wide range of customers throughout Pakistan including retail, industrial, aviation, marine and government/defence sectors. PSO has been meeting the country's fuel needs by merging sound business sense with national obligation.
The Government of Pakistan(GOP) holds approximately 54% stake in Pakistan State Oil Company Limited ("PSO"), including both direct holdings of the Federal Government and indirect holdings through GOP owned institutions. The GOP is in the advanced stages of divesting 51% of the in PSO to a strategic investor.
Equities research analysts at The Benchmark Company Downgraded shares of Royal Dutch Shell plc (ADR) (RDS.A) to a "Sell" rating in a research note released to investors today.
Royal Dutch Petroleum Company owns 60% of the Royal Dutch/Shell Group of companies. These companies are involved in all phases of the petroleum industry from exploration to final processing and delivery. Royal Dutch Petroleum Company has not operations of its own, and virtually the whole of its income is derived from its 60% interest.
Shares of Royal Dutch Shell plc (ADR) (RDS.A) are trading up 0.63% as of 4:03PM EDT, hitting 73.50. Royal Dutch Shell plc (ADR) has a 52 week low of 49.16 and a 52 week high of 73.85. The companies last released earnings were 6.55 per share. were The company has a market cap of and a price-to-earnings ratio of 11.19.
There should be proper shades and proper sitting arrangements at the filling stations.
Lubricants should be disposed in a proper way to protect the environment from being polluted.
Shell should provide small incentive to its customers.
Schemes like "buy 50 liters of super and get a cola drink free", should be kept introducing time to time.
Shell should make company operation site in every city to capture the new market.
There is only one thing that is constant that is change; shell should invest on research& development to cope with dynamic environment.
Company should establish new regional office to control the activities of company operations.
The company should provide the facility of free oil change on all its outlets.
Shell should develop modern retail outlets. These outlets should have all possible facilities for customers because one of the reasons behind decrease market share is modernization of competitors.
Shell should develop effective marketing programs that help the company to increase sales that will lead to increase the market share. In these market programs emphasis should be given to advertising, which is the most effective and efficient tools of promotion for such type of business.
Change management, hard and soft system, business ethics